Although immediately plunging 0.33 percent to IDR 11,478 per US dollar after its opening on Monday (10/03), the Indonesian rupiah exchange rate had appreciated 0.57 percent to IDR 11,375 per US dollar by 14:00 local Jakarta time (Bloomberg Dollar Index). The rupiah's performance today is in sharp contrast with other Asian currencies. As US nonfarm payrolls increased more than expected and Chinese exports fell sharply (18.1 percent year-on-year) in February 2014, the US dollar appreciated against most Asian currencies.
China's trade balance turned into a deficit after the February 2014 trade deficit and triggered concern about further decline of economic growth in the world's second-largest economy. The central bank of China set the yuan's mid rate much lower than on Friday (07/03). As a consequence other Asian emerging currencies, which are dependent on China's economy, depreciated.
Employers in the USA added 175,000 jobs to payrolls in February 2014, thus improving from the creation of 129,000 positions in January 2014. This increase is likely to ease concerns about an abrupt slowdown of US economic growth while causing expectation that the Federal Reserve will continue to reduce its monetary stimulus. The US nonfarm payrolls helped lift the US 10-year Treasury yield to about 2.82 percent on Friday (07/03), a six-week high.
That the rupiah is not following the general depreciating trend of Asian currencies today, but - on the contrary - is appreciating strongly against the US dollar is mainly due to the recently improved economic fundamentals of Southeast Asia's largest economy. Although the current account deficit and inflation are still high, both have shown a significant moderating trend since the end of 2013. Moreover, market participants have responded positively towards a third economic policy package which was announced by Economic Minister Hatta Rajasa and is expected to be implemented in the first quarter of 2014. This new package will make it attractive for foreign companies to re-invest their profits in Indonesia.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.47 percent on Monday (10/03) to IDR 11,449 per US dollar.